The daily business briefing: April 21, 2020
1.
A U.S. crude oil futures contract plunged below $0 per barrel for the first time in history on Monday as demand dried up due to coronavirus shutdowns and storage facilities reached capacity. U.S. benchmark West Texas Intermediate crude for May delivery dropped to negative $37.63 per barrel. That means producers were paying traders to take the oil. West Texas Intermediate for June delivery, which offers a better picture of the state of the market, fell by 18 percent to $20.43 per barrel. The July contract dropped by 11 percent to $26.18 per barrel. The price of international benchmark Brent crude for June delivery fell by 5.6 percent to $26.49 per barrel. Both contracts bounced back from their lows overnight, fluctuating in volatile trading. [CNBC]
2.
Boeing and another major heavy equipment manufacturer on Monday unveiled plans to restart operations despite ongoing concerns about whether there is enough coronavirus testing to prevent a rebound in coronavirus cases if the economy gets going again. Boeing said it would bring back 27,000 employees this week to build passenger jets in Seattle-area factories. It will stagger shifts and give everyone face masks as protections against the virus. Doosan Bobcat, North Dakota’s biggest manufacturer, will put 2,200 employees back to work at three factories that make farm equipment. Cautious reopenings also are starting in Europe, where new infections are falling in some countries, including Italy, Spain, and Germany. [The Associated Press]
3.
Several Southern states moved Monday to let some businesses start reopening after weeks of shutdowns to fight the coronavirus. South Carolina let retail shops reopen Monday afternoon under an executive order signed by Gov. Henry McMaster (R). Georgia Gov. Brian Kemp (R) said people in the state could start getting haircuts, pedicures, massages, and tattoos again starting Friday. They also can return to their gyms. Tennessee Gov. Bill Lee (R) said his state’s stay-at-home order would expire on April 30, so most businesses would be able to reopen starting May 1. Meanwhile, the COVID-19 coronavirus is continuing to spread in much of the nation, and many governors are saying they don’t have enough testing ability to safely start reopening their economies. [The New York Times]
4.
U.S. stock index futures fell early Tuesday, extending losses that came after an unprecedented plunge into below zero for some crude oil prices. Futures for the Dow Jones Industrial Average were down by more than 1 percent several hours before the opening bell, while those of the S&P 500 and the Nasdaq fell by less than 1 percent. The Dow dropped by 2.4 percent on Monday. The S&P 500 and the Nasdaq fell by 1.8 percent and 1 percent, respectively. Investors remained focused on developments in the volatile oil market, as storage facilities filled up due to falling demand during the coronavirus crisis, as well as a fresh batch of corporate earnings reports. IBM shares fell by 3.8 percent after the company reported a 3.4 percent drop in first quarter revenue. Coca-Cola reported that volume was down 25 percent so far in April due to the pandemic. [CNBC]
5.
Hertz said Monday that it would lay off 10,000 employees in North America to cut costs as demand plummets because of the COVID-19 coronavirus pandemic. Hertz started the year with 38,000 workers, including 29,000 in the U.S. The terminations took effect April 14 for non-union workers, and hit union employees on Tuesday. The company said in March that it would be starting furloughs due to the pandemic. It said in a regulatory filing that it would face about $30 million in costs related to the terminations. “Like the rest of the global travel sector, COVID-19’s impact on Hertz arrived swiftly, and the reversal in customer demand has been significant,” CEO Kathryn Marinello said in March. [Reuters]
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